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HomeNewsArchivesHOVENSA SHUTS COKER DOWN 7-10 DAYS FOR REPAIRS

HOVENSA SHUTS COKER DOWN 7-10 DAYS FOR REPAIRS

Sept. 19, 2002 – It's been 24 hours of good news and bad news for Hovensa.
The refinery announced late Wednesday that Triangle Construction and Maintenance, one of six Hovensa contractors whose workers remained on furlough, had been successful in securing general liability insurance for its operations.
As a result, a Hovensa release stated, some 50 Triangle employees were to report for work on Thursday, with the remaining force of about 310 expected to return on Friday.
Then, on Thursday morning, came word that Gov. Charles W. Turnbull had signed into law a provision of the Omnibus Act of 2003 that in effect forbids employers from requiring that job applicants and new non-union hires sign an agreement to put disputes to binding arbitration. Hovensa put such a policy into effect in July.
And on Thursday afternoon, Hovensa spokesman Alex A. Moorhead announced that the company's coker operations had been shut down "for the repair of a component that failed." He said it is expected to take seven to 10 days to get the coker complex functioning again.
A three-sentence release from Hovensa provided no further details.
Turnbull said he approved the measure restricting the use of arbitration in the face of widely varying legal opinions on the issue of pre-employment agreements. U.S. District Judge Raymond Finch in June upheld the legality of imposing such a condition of employment. Hovensa had made public statements in recent weeks urging the governor to line-item veto the measure, saying it would not hold up in court; labor interests opposed to the requirement had spoken out disputing that view. The governor said he "determined that so severe a chasm is most appropriately resolved by the judiciary."
In addition, the governor said in his letter of transmittal to Senate President Almando "Rocky" Liburd that he wished "to acknowledge receipt" of a Senate resolution asking him to appoint a task force "to investigate employment concerns at Hovensa." Turnbull then commented: "The Virgin Islands business arena is currently undergoing various hardships resulting from numerous causes. It is a delicate balance that the government must maintain in order to ensure that the business sector receives fair treatment and likewise that employees are fairly treated. The Legislature should be careful to avoid the appearance of prejudgment and ensure that all sides are given a fair hearing."
In the Wednesday evening Hovensa release, Moorhead, vice president for government affairs and community relations, provided background on the events leading up its laying off hundreds of contract workers at midnight last Thursday because its liability coverage had expired and replacement insurance had not been obtained.
Moorhead said safety is not an issue in Hovensa's liability insurance problems. "The refinery is relatively new compared to other refineries in the U.S.," he said. Its oldest process units were constructed in 1966, the year Hess Oil Virgin Islands Corp. began operations, and most of the others have been built since the 1970s. The refinery, he said, "is well maintained, and, unlike most refineries, it's kept clean of litter, debris and spills."
Further, he said, the federal Occupational Safety and Health Administration's "recordable incident rate for contractor-employees" at Hovensa "compares favorably with that of other U.S. refineries and has been declining in recent years." The rate as of last month was 1.05, he said, representing a steady drop from 3.11 in 2000. The average rate for the refining industry is 1.35, he said. Hovensa's rate "is considered excellent safety performance, particularly in light of the major construction activities that took place during the last two years," he added.
Work on the refinery's huge coker, a 2.5-year undertaking, was completed in July and the complex had been in operation since Aug 1. The coker allows Hovensa to process a heavier, cheaper grade of crude oil than had been possible. Hovensa itself — a joint venture of Hess Oil Virgin Islands Corp. and a V.I. subsidiary of the giant state oil company Petroleos de Venezuela — was formed in order to facilitate the process of obtaining some $600 million in financing for the coker. In addition, extensive repair work was completed last summer on the refinery's catalytic cracking unit.
Moorhead's comments on safety were in response to allegations by Lee Rohn, a St. Croix lawyer who has represented numerous Hovensa workers in legal actions, that the refinery "is not a safe place to work." (See "Refinery layoffs spark charges, responses".)
He also challenged comments by Rohn and Lt. Gov. Gerard Luz James II that liability insurance is available, but at high premiums, calling on Rohn "to demonstrate the sincerity of her concern for the workers who are still out of work by providing information on any company that is willing to issue a policy for their employers."
According to Moorhead, Hovensa had provided liability insurance for its contractors since 1999 through a single policy purchased from American International Insurance Co. of Puerto Rico. On May 7, he said, American International advised Hovensa that it would not renew the policy that was to expire on Sept. 13.
Hovensa then began working with two large insurance brokers to seek replacement coverage, and those brokers contacted some 25 companies, Moorhead said. But efforts "were unsuccessful in getting any insurer to offer a policy to cover the maintenance contractors," the release stated. He had said earlier that one concern expressed by carriers was "the aggregate size of claims pending against the contractors." V.I. insurance industry executives have said there is a need for tort reform because of the exceptionally high jury awards in insurance cases locally and the resultant pressure on companies to settle out of court.
On July 26, Moorhead said, Hovensa asked its contractors to look into getting coverage for their own operations. In early September, the release said, Hovensa confirmed to the contractors that it had been unable to find an insurer willing to cover them as a group. Moorhead said this week that Hovensa would reimburse the contractors for insurance costs that they had not previously been responsible for.
A total of 11 contractors had been covered by the American International policy; four found insurance on their own through affiliated mainland companies before Sept. 13, and their workers remained on the job. Another, Longview Inspection, secured coverage early this week, enabling its equipment inspectors to go back to work.
Leroy Mitchell, Triangle general manager, had said on Wednesday that he hoped to be "close to an agreement" within the day.
The five contractors still without insurance, and whose workers remain on furlough, are Addison Construction, Best Construction, Jacobs-IMC, M&M Construction and V.I. Industrial Maintenance Corp. According to Moorhead, all except Longview provide mainly maintenance services, and the immediate impact of the layoffs has been interruption of work on several projects and loss of clerical, janitorial and groundskeeping services.
Moorhead said the five companies have approximately 650 workers who remain off the job. Adding the Triangle and Longview personnel, this would give a total of more than a thousand workers furloughed. Hovensa announced last Thursday that some 800 had been laid off. Moorhead said on Thursday that the "estimate of 800 was understated" and that the total was approximately 1,045.

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